Sales rose 0.1 percent from November, when they fell 0.1
percent, the Trade Ministry said in Tokyo today. The median
estimate of eight economists surveyed by Bloomberg News was for
a 0.4 percent gain. Sales rose 0.4 percent from a year earlier.

Weak consumer demand and a seventh monthly fall in exports
in December highlight the challenges facing Prime Minister
Shinzo Abe as he tries to defeat deflation and lead the country
out of recession. The smaller-than-forecast increase in retail
sales was even as colder-than-usual weather aided fuel sales.

“Winter bonuses weren’t good and consumer sentiment
remains weak,” said Azusa Kato, an economist at BNP Paribas SA
in Tokyo. “That’s why consumption didn’t recover much in the
fourth quarter.”

The component of the data that includes fuel rose 1.6
percent from the previous month, the ministry said. Car sales
also rose as a dip in demand after the September expiry of
purchasing subsidies ran its course, a ministry official said.

The nation’s gross domestic product shrank at an annualized
3.5 percent pace in the third quarter of last year, the second
straight contraction and meeting the textbook definition of a
recession. The median estimate of economists surveyed by
Bloomberg News is for a 0.6 percent decline in the three months
through December 2012, with a return to growth this quarter of
1.6 percent.

The yen has depreciated more than 9 percent against the
dollar in the past two months as Abe has pressed for more
central bank easing, improving the outlook for exporters. The
currency was 0.1 percent weaker at 90.83 per dollar as of 9:45
a.m. in Tokyo. The Nikkei 225 Stock Average was 0.8 percent
higher, heading for its 12th week of gains.

Wages dropped for a third month in November from the
previous year. Large companies cut winter bonuses by 2.95
percent in 2012, according to a December report released by the
Keidanren, a business lobby.